Question

Rivera Roofing Company, owned by Reyna Rivera, began operations in July and completed these transactions during that first month of operations.

July 1 Reyna Rivera invested \(80,000 cash in the company in exchange for its common stock.

2 The company rented office space and paid \)700 cash for the July rent.

3 The company purchased roofing equipment for \(5,000 by paying \)1,000 cash and agreeing to pay the \(4,000 balance in 30 days.

6 The company purchased office supplies for \)600 cash.

8 The company completed work for a customer and immediately collected \(7,600 cash for the work.

10 The company purchased \)2,300 of office equipment on credit.

15 The company completed work for a customer on credit in the amount of \(8,200.

17 The company purchased \)3,100 of office supplies on credit.

23 The company paid \(2,300 cash for the office equipment purchased on July 10.

25 The company billed a customer \)5,000 for work completed; the balance is due in 30 days.

28 The company received \(8,200 cash for the work completed on July 15.

30 The company paid an assistant’s salary of \)1,560 cash for this month.

31 The company paid \(295 cash for this month’s utility bill.

31 The company paid \)1,800 cash in dividends to the owner (sole shareholder).

Required 1. Create the following table similar to the one in Exhibit 1.9.

Use additions and subtractions within the table to show the dollar effects of each transaction on individual items of the accounting equation. Show new balances after each transaction.

Short answer

Rent is the cost of using property owned by someone else and the total of the accounting equation is $103,545.

Step-by-step solution

Definition of Rent Expense

The rent expense is defined as the amount of money spent by the business for using the property owned by someone else.

Preparation of accounting equation

	Assets					=	Liabilities	Equity
Date	Cash	AR	Off	Off	Roof		Accounts	Common	-Div	Rev	-Exp
	($)	($)	Supp ($)	Equip ($)	Equip ($)		Payable ($)	Stock ($)	($)	($)	($)
July
1	80,000							80,000
Bal	80,000`							80,000
2	-700										-700
Bal	79,300							80,000			-700
3	-1,000				5,000		4,000
Bal	78,300				5,000		4,000	80,000			-700
6	-600		600
Bal	77,700		600		5,000		4,000	80,000			-700
8	7,600									7,600
Bal	85,300		600		5,000		4,000	80,000		7,600	-700
10				2,300			2,300
Bal	85,300		600	2,300	5,000		6,300	80,000		7,600	-700
15		8,200								8,200
Bal	85,300	8,200	600	2,300	5,000		6,300	80,000		15,800	-700
17			3,100				3,100
Bal	85,300	8,200	3,700	2,300	5,000		9,400	80,000		15,800	-700
23	-2,300						-2,300
Bal	83,000	8,200	3,700	2,300	5,000		7,100	80,000		15,800	-700
25		5,000								5,000
Bal	83,000	13,200	3,700	2,300	5,000		7,100	80,000		20,800	-700
28	8,200	-8,200
Bal	91,200	5,000	3,700	2,300	5,000		7,100	80,000		20,800	-700
30	-1,560										-1,560
Bal	89,640	5,000	3,700	2,300	5,000		7,100	80,000		20,800	-2,260
31	-295										-295
Bal	89,345	5,000	3,700	2,300	5,000		7,100	80,000		20,800	-2,555
31	-1,800								-1,800
Bal	87,545	5,000	3,700	2,300	5,000		7,100	80,000	-1,800	20,800	-2,555